Comparison Shopping Engines vs. Marketplaces

In this post we will discuss the benefits of selling on the marketplaces, such as Amazon, Buy.com, and Overstock.com, and what sorts of advantages a merchant can get here as compared to the CSE’s.

1. Potential Traffic is Limitless – The charts below, generated courtesy of Google trends and Alexa respectively demonstrates just how much more traffic the mother of all retailer websites, Amazon gets than all the rest–in fact, the traffic that all the shopping engines fails to even come close to how much traffic Amazon gets, combined. The number of potential eyeballs just to have access to your products can be overwhelming.
   
2. Rev Share Models Make Sure You Don’t Overspend – One of the major hassles of managing a CSE campaign is getting wasted clicks that don’t amount to anything that the merchant is forced to pay for anyway. With a marketplace such as Amazon, each click that your product generates is completely free of charge, and you only pay Amazon a fee (usually 15%) when a transaction is successful.
3. Cost of Sale % Remains a Constant – Cost of sale % (defined as spend/revenue) can often fluctuate on a daily/weekly/monthly basis on the shopping engines. Depending on a merchant’s margin of revenue, a target COS% can be anywhere from 5 – 25%, and generally the more constant and predictable the value, the better. With Amazon a merchant is essentially guaranteed a 15% COS on all products sold, which may be an overall improvement, or a minor (but predictable) drop off.
4. Associating Your Products with Amazon – As one of the original spots to purchase items online, the name “Amazon” is associated with reliability and quality. It’s a spot where a customer expects to purchase high quality goods combined with a high level of service. You can be sure then that if a customer finds your product, he/she will generally feel safer purchasing through what they think is Amazon.

In fact a lot of consumers won’t even realize they’re purchasing from a 3rd party when they go through Amazon, as they won’t go toward your landing pages at all. Compare this to a typical CSE where a consumer has to click through to a merchant’s landing page in order to complete the purchase. It can almost be thought of as franchising the Amazon name for your products.

Of course, there are a few catches when listing on a marketplace that may be a bit problematic for merchants who are only used to listing on the shopping engines.

Since merchants who post on the marketplaces are essentially piggybacking on the Amazon (or Buy.com or Overstock) name, they expect as a high level of service to be provided as they would with Amazon.

This means that each product has to be highly detailed in accordance with the marketplaces specifications–that is to say certain specifications cannot be omitted when sending a data feed (generally the shopping engines aren’t as strict). For certain merchants who’s data feeds aren’t very dynamic, this can cause issues with the initial feed if a merchant cannot provide these specifications for their products.

Secondly, and this is perhaps the most important detail–merchants must uphold a certain level of positive feedback in order to stay listed on Amazon. Once feedback levels drop below a certain threshold, Amazon reserves the right to delist or even blacklist a merchant from posting on their site again.

It is important to stress then that if you are a merchant thinking of listing on Amazon, be sure that you are:

• capable of handling an increase in orders
• able to ship out all your listed products in a timely fashion and that everything is in inventory

There have been occasions where a merchant gets a sudden, unexpected overload in orders that they are unable to fulfill to Amazon standards, and this minor slip-up causes their feedback to drop suddenly. And once a merchant falls below that threshold and gets delisted, it can become extremely difficult to be able to list on there again.

In essence then–not only can it be a maze to get listed, but to stay listed is no walk in the park either.

-Tien